Insurance Professionals & Lenders: Frequently Asked Questions

This page provides insurance professionals and lenders with answers to the most frequently asked questions on the National Flood Insurance Program (NFIP) and understanding a community's risk to floods as it relates to mandatory flood insurance requirements. This page is intended for insurance professionals and financial lenders.

1. What does community participation in the National Flood Insurance Program (NFIP) mean and how does that affect a homeowner?

Communities (i.e., local governments) decide to participate in the NFIP, which enables property owners to purchase insurance protection against losses from flooding. Specifically, communities that agree to manage flood hazard areas by adopting minimum regulatory standards may participate in the NFIP. These standards are listed in Section 60.3 of the NFIP regulations. Section 60.3 and other portions of the NFIP regulations may be accessed through the Guidance Documents and Other Published Resources page on the FEMA Website.

If a community chooses not to participate in the NFIP, property owners in that jurisdiction are not able to purchase federally backed flood insurance. In addition, federal grants, loans, disaster assistance and federal mortgage insurance are unavailable for the acquisition or construction of structures in the floodplain shown on the NFIP maps.

If a community chooses not to participate in the NFIP, property owners are not subject to the federal flood insurance purchase requirements. However, a lender is still required to inspect the effective NFIP flood maps to determine and provide notice of flood hazards and risks. A lender may require a borrower to obtain flood insurance even in the absence of a federal requirement.

2. What are some options a property owner has to potentially remove the flood insurance requirement?

In some cases, a lender determines that a property is in a Special Flood Hazard Area (SFHA) shown on a Flood Insurance Rate Map (FIRM) but the property owner disagrees with that determination. The SFHA is also known as the 100-year floodplain. It is more precisely defined as the floodplain associated with a flood that has a 1-percent-annual chance of being equaled or exceeded in any given year. Therefore the SFHA is not a flood event that happens once in a hundred years, rather a flood event that has a one percent chance of occurring every year. Property owners in this situation have a couple of options. Depending on the specific circumstances, you may apply for a Letter of Determination Review (LODR), a Letter of Map Amendment (LOMA) or a Letter of Map Revision Based on Fill (LOMR-F).

The application forms for LOMAs and LOMR-Fs can be found on the FEMA Forms Webpage and provide comprehensive, step-by-step instructions for requesters to follow, ensuring that your submittal is complete and logically structured. Use of these forms allows FEMA to complete its review quicker and at lower cost to the National Flood Insurance Program. While completing the forms may seem burdensome, the advantages to you outweigh any inconvenience. The following paragraphs describe first the LOMA or LOMR-F process, followed by the LODR process.

Upon receiving a completed MT-EZ (for LOMAs) or MT-1 (for LOMR-Fs) application, FEMA reviews property-specific information (including surveyed elevation data, typically the elevation of the lowest adjacent grade of the structure in question, provided by a Licensed Land Surveyor Note: the homeowner may be required to hire a land surveyor to perform this elevation survey, if this data is not readily available) and makes a final flood zone determination for the property. Once an application and all necessary data are received, the determination is normally issued within 30 - 60 days. If the LOMA or LOMR-F removes the SFHA designation from the property, it can then be presented to the lender as proof that there is no federal flood insurance requirement for the property. However, even though a LOMA or LOMR-F may waive the federal requirement for flood insurance, a lender retains the prerogative to require flood insurance. No fee is charged for the review of a LOMA; however, there is a review fee for a LOMR-F. Check the flood map-related fees on the Flood Hazard Mapping Website.

Within 45 days following the date your lender notified you that your property is in the SFHA shown on the FIRM for your community, you and your lender may jointly request that FEMA review your lender's determination; FEMA's response to such requests is a LODR. In response to such requests, FEMA reviews the same information your lender used to determine that your structure was located in an SFHA. Unlike with a LOMA or LOMR-F, the elevation of the structure or property relative to the elevation of the 1-percent-annual-chance flood is not considered for a LODR. Just like your lender, FEMA only considers the location of the structure relative to the SFHA boundary shown on the FIRM. FEMA reviews this information and issues its finding of whether the structure is located in the SFHA according to the currently effective FIRM. While this determination cannot consider the elevation of your structure or property, it can be useful if you feel the lender's interpretation of the FIRM is incorrect.

There are obviously some important distinctions between the processes (LODR, LOMA and LOMR-F).

The determinations are based on different data.

The LODR process does not consider the elevation of the structure or property. Rather, it considers only the horizontal location of the structure relative to the SFHA shown on the FIRM. For the LOMA and LOMR-F processes, actual survey elevation data are required to determine if the property or structure is at or above the 1-percent-annual-chance flood elevation.

There are different review and processing fees involved.

Process

Fee

LOMA

FREE

LODR

$ 80

LOMR-F

$425

The determinations result in different actions.

A LODR does not result in an amendment or revision to the FIRM. It only presents the FEMA finding regarding the structure's location with respect to a delineated SFHA.

An approved LOMA or LOMR-F actually removes the SFHA designation from the structure or lot by letter.

3. What elevation is used when rating a structure for a flood insurance policy?

The difference between the elevation of the lowest floor (including the basement) of a structure and the elevation of the 1-percent-annual-chance flood is one of many factors used to determine the insurance rating.

4. How do I determine if a community is participating in the National Flood Insurance Program (NFIP)?

To determine the participation status of a particular community, you can check with the floodplain administrator in that community or you can look up the community in the Community Status Book (CSB), a report that lists all communities participating in the NFIP. The CSB includes status of communities, nonparticipating communities with maps, effective dates of the current map index and Community Identification Numbers.

Community participation in the NFIP is voluntary. Communities that join the NFIP agree to manage flood hazard areas by adopting the minimum regulatory standards of the NFIP. These standards are listed in Section 60.3 of the NFIP regulations, which may be accessed through the Guidance Documents and Other Published Resources page on the FEMA Website.

If a community chooses not to participate in the NFIP, property owners in that jurisdiction are unable to purchase federal flood insurance. In addition, federal grants, loans, disaster assistance and federal mortgage insurance are unavailable for the acquisition or construction of structures located in the floodplain as shown on the NFIP maps.

Similarly, if a community chooses not to participate in the NFIP, property owners are not subject to the federal flood insurance purchase requirements. However, a lender is still required to inspect any flood maps to determine flood hazard risk and provide notice of such risk. A lender may require a borrower to obtain flood insurance even in the absence of a federal purchase requirement.

5. What can be done when a lender and an insurance agent have differing flood zone documentation?

It is important for the flood zones to be accurate between the lender’s Standard Flood Hazard Determination Form (SFHDF), more commonly known as a flood zone determination and the flood zone shown on the policy declarations page. This is for the purpose of compliance exams conducted on lenders by their particular federal regulatory entity. A regulatory entity may deem the flood zone discrepancy as a violation of the Act.

In cases when a lender’s flood zone determination is different from that of an insurance agent, FEMA recommends that the more hazardous flood zone be used for rating, unless the building qualifies for the NFIP Grandfather Rules or is eligible under the 2-Year Preferred Risk Policy(PRP) Extension.

FEMA has required that all Write-Your-Own (WYO) companies and the NFIP Direct, display two flood zones (Current Flood Zone and Flood Risk/Rated Zone) on the flood insurance policy declaration page. The only time one flood zone will be displayed on the policy, is if the Current Flood Zone and Flood Risk/Rated Zone are the same. In those cases, if the flood zone on the SFHDF and policy declaration page differ, check for the “grandfather” indicator on the declaration page or request the insurance agent verify with the insurer that the building qualifies for grandfathering. If it does, the insurance agent can provide the insurer with the proper documentation, if necessary, and the insurer can endorse the policy declaration page to indicate “yes” to grandfathering.

Even after a property owner goes to the extent to provide the lender with documentation, such as an Elevation Certificate, to challenge the flood zone designation and still no agreement can be reached, the property owner may suggest to the lender that FEMA make a final determination through a process called, a Letter of Determination Review (LODR).

If you are a property owner, within the 45 days following the date your lender notified you that your property is in the SFHA shown on the FIRM for your community, you and your lender may jointly request that FEMA review your lender's determination. In response to such requests, FEMA reviews the same information your lender used to determine that your structure was located in an SFHA. Unlike with a Letter of Map Amendment or Letter of Map Revision Based on Fill, the elevation of the structure or property relative to the elevation of the 1-percent-annual-chance flood is not considered for a LODR. Just like your lender, FEMA only considers the location of the structure relative to the SFHA boundary shown on the FIRM. FEMA reviews this information and issues its finding of whether the structure is located in the SFHA according to the currently effective FIRM. While this determination cannot consider the elevation of your structure or property, it can be useful if you feel the lender's interpretation of the FIRM is incorrect.

6. What is a "100-year flood" and how is it different from a "1-percent-annual-chance flood" or a "base flood?"

The term "100-year flood" is misleading. It is not the flood that will occur once every 100 years. Rather, it is the flood that has a 1-percent chance of being equaled or exceeded each year. Thus, the 100-year flood could occur more than once in a relatively short period of time or even within the same month. Because this term is misleading, FEMA has also defined it as the "1-percent-annual-chance flood." The "1-percent-annual-chance flood" is the term that is now used by most federal and state agencies and by the National Flood Insurance Program.

7. What is the Coastal Barrier Resources System and how does it affect flood insurance?

The U.S. Congress passed the Coastal Barrier Resources Act (CBRA) in 1982 and the Coastal Barrier Improvement Act (CBIA) in 1990, to define and establish a system of protected coastal areas (including the Great Lakes) known as the Coastal Barrier Resources System (CBRS). Coastal barriers are unique landforms that serve as a protective barrier against the forces of wind and tidal actions caused by coastal storms. In addition, coastal barriers provide a protective habitat for a variety of aquatic species.

The CBRA was initially enacted to reduce or restrict federal actions that were believed to encourage development in certain undeveloped coastal barrier areas, including both islands and mainland property. While the CBRA and CBIA do not prevent private financing and development within the CBRS, they do limit financial assistance by federal agencies. Any expenditure of federal funds for a loan, grant, guarantee, insurance payment, rebate, subsidy or any other form of direct or indirect federal assistance within the CBRS is prohibited, with specific and limited exceptions.

The CBIA also established CBRS units designated as "Otherwise Protected Areas" or OPAs. OPAs are undeveloped coastal barriers within the boundaries of an area established under federal, state or local law or held by a qualified organization, primarily for wildlife refuge, sanctuary, recreational or natural resource conservation purposes. Within OPAs, only the issuance of new federal flood insurance is prohibited. Federal flood insurance may be obtained for a structure in the OPA if written documentation certifies that the structure is used in a manner consistent with the purpose for which the area is protected.

Areas to be added to the CBRS are identified by the U.S. Department of the Interior's Fish and Wildlife Service and recommended to the U.S. Congress. Federal assistance prohibitions apply to the new areas on the date that the U.S. Congress approves additions to the CBRS. In cooperation with the Fish and Wildlife Service, FEMA transfers the CBRS boundaries to Flood Insurance Rate Maps (FIRMs) using congressionally adopted source maps titled "CBRS." FIRMs clearly depict the different CBRS areas and their effective dates with special map notes and symbols. Although FEMA shows CBRS areas on FIRMs, the U.S. Congress is the only entity that may authorize or initiate a revision to CBRS boundaries.

Federal flood insurance is unavailable for new construction or substantial improvement to existing structures in CBRS areas that occurs on or after the CBRS area's effective date. Federal flood insurance is available if the building was constructed (or permitted and under construction) before the CBRS area's effective date. If an existing insured structure is substantially improved or damaged, any federal flood insurance policy will be canceled. If a federal flood insurance policy is issued in error, it will be cancelled and the premium refunded; no claim can be paid, even if the error is not found until a claim is made.

8. What are the different flood hazard zone designations shown on a Flood Insurance Rate Map (FRIM) and what do they mean?

The zone designations shown on the FIRMs are defined below.

Zone AZone A is the flood insurance rate zone used for 1-percent-annual-chance (base flood) floodplains that are determined for the Flood Insurance Study (FIS) by approximate methods of analysis. Because detailed hydraulic analyses are not performed for such areas, no Base Flood Elevations (BFEs) or depths are shown in this zone. Mandatory flood insurance purchase requirements apply.

Zone AE and A1-A30Zones AE and A1-A30 are the flood insurance rate zones used for the 1-percent-annual-chance floodplains that are determined for the FIS by detailed methods of analysis. In most instances, BFEs derived from the detailed hydraulic analyses are shown at selected intervals in this zone. Mandatory flood insurance purchase requirements apply. AE zones are areas of inundation by the 1-percent-annual-chance flood, including areas with the 2-percent wave runup, elevation less than 3.0 feet above the ground and areas with wave heights less than 3.0 feet. These areas are subdivided into elevation zones with BFEs assigned. The AE zone will generally extend inland to the limit of the 1-percent-annual-chance Stillwater Flood Level (SWEL).

Zone AHZone AH is the flood insurance rate zone used for areas of 1-percent-annual-chance shallow flooding with a constant water-surface elevation (usually areas of ponding) where average depths are between 1 and 3 feet. BFEs derived from detailed hydraulic analyses are shown at selected intervals within this zone. Mandatory flood insurance purchase requirements apply.

Zone AOAO zones are areas of sheet-flow shallow flooding where the potential runup is less than 3.0 feet above an overtopped barrier crest (ΔR<3.0 feet). The sheet flow in these areas will either flow into another flooding source (AE zone), result in ponding (AH zone) or deteriorate because of ground friction and energy losses and merge into the X zone. AO areas are designated with 1-, 2-, or 3-foot depths of flooding.

Zone ARZone AR is the flood insurance rate zone used for areas protected by flood-control structures, such as levees, that are being restored. FEMA will consider using the Zone AR designation if the flood protection system has been deemed restorable by a federal agency in consultation with a local project sponsor; a minimum level of flood protection is still provided to the community by the system and restoration of the flood protection system is scheduled to begin within a designated time period and in accordance with a progress plan negotiated between the community and FEMA. Mandatory purchase requirements for flood insurance apply in Zone AR but the rate will not exceed that of an unnumbered Zone A, if the structure is built in compliance with Zone AR floodplain management regulations.

For floodplain management in Zone AR areas, the property owner is not required to elevate existing structures when making improvements. However, new structures must be elevated (or floodproofed for nonresidential structures) so that the lowest floor, including the basement, is at least 3 feet above the highest adjacent existing grade, if the BFE does not exceed 5 feet at the proposed development site. For infill sites, rehabilitation of existing structures or redevelopment of previously developed areas, there is a 3-foot elevation requirement regardless of the depth of the BFE at the project site.

The Zone AR designation will be removed and the restored flood-control system will be shown as providing protection from the base flood on the National Flood Insurance Program (NFIP) map when the restoration project is complete and all the necessary data have been submitted to FEMA.

Zone A99Zone A99 is the flood insurance rate zone used for areas within the 1-percent-annual-chance floodplain that will be protected by a federal flood-protection system, where construction has reached specified statutory milestones. No BFEs or depths are shown in this zone. Mandatory flood insurance purchase requirements apply.

Zone DThe Zone D designation is used for areas where there are possible but undetermined flood hazards. In areas designated as Zone D, no analysis of flood hazards has been conducted. Flood insurance is optional and available and the flood insurance rates for properties in Zone D are commensurate with the uncertainty of the flood risk.

Zone V and V1 - 30Zone V and V1 - 30 designation is for coastal areas with a 1-percent or greater chance of flooding and an additional velocity hazard associated with storm waves (wave action). Because detailed hydraulic analyses are not performed for such areas, no BFEs or depths are shown in this zone. Mandatory flood insurance purchase requirements apply.

Zone VEVE zones are coastal high hazard areas where wave action and/or high-velocity water can cause structural damage during the base flood. They are subdivided into elevation zones with BFEs assigned. VE zones are identified using one or more of the following criteria for the base flood conditions:

The wave runup zone occurs where the (eroded) ground profile is 3.0 feet or more below the 2-percent wave runup elevation

The wave overtopping splash zone is the area landward of the crest of an overtopped barrier, in cases where the potential 2-percent wave runup exceeds the barrier crest elevation by 3.0 feet or more(ΔR>3.0 feet). (See Subsection D.2.8.2.)

The breaking wave height zone occurs where 3-foot or greater wave heights could occur (this is the area where the wave crest profile is 2.1 feet or more above the total stillwater level).

The primary frontal dune zone, as defined in 44 CFR Section 59.1 of the NFIP regulations.

For the Pacific Coast only:

The high-velocity flow zone is landward of the overtopping splash zone (or area on a sloping beach or other shore type), where the product of depth of flow times the flood velocity squared (hv2) is greater than or equal to 200 ft3/sec2.

Zone B and X (shaded)Zones B and X (shaded) are areas of 0.2-percent-annual-chance floodplain, areas of 1-percent-annual-chance (base flood) sheet flow flooding with average depths of less than 1 foot, areas of base flood stream flooding with a contributing drainage area of less than 1 square mile or areas protected from the base flood by levees. No BFEs or depths are shown in this zone and insurance purchase is not required

Zones C and X (unshaded)Zones C and X (unshaded) are flood insurance rate zones used for areas outside the 0.2-percent-annual-chance floodplain. No BFEs or depths are shown in this zone, and insurance purchase is not required.

9. How is an Elevation Certificate used?

A community's permit file must have an official record that shows new buildings and substantial improvements in all identified Special Flood Hazard Areas (SFHAs) are properly elevated. This elevation information is needed to show compliance with the community's floodplain management ordinance. FEMA encourages communities to use the FEMA Elevation Certificate to fulfill this requirement because it also can be used by the property owner to obtain flood insurance. Communities participating in the Community Rating System are required to use the Elevation Certificate.

Buildings constructed on or before December 31, 1974 or before the effective date of the initial Flood Insurance Rate Map (FIRM) for a community, whichever is later, are considered Pre-FIRM and an elevation certification is not required for flood insurance. The reasoning behind this is that a dwelling should not be held to an elevation standard that had not yet been established when it was constructed. However, if the Pre-FIRM building is at or above the Base Flood Elevation (BFE) established after its construction, then it can qualify for Post-FIRM rating. Pre-FIRM rates are fixed by zone (as well, as if a basement/enclosed area under elevated floor) and assume the lowest floor of the building may not be at or above the expected level of flooding.

Post-FIRM buildings (i.e., buildings constructed on or after the date of the first effective FIRM in effect for the community) must be rated using an Elevation Certificate, unless eligible for grandfathering, for most Special Flood Hazard Areas (SFHAs), the area subject to inundation by the base (1-percent-annual-chance) flood). If the lowest floor of a building constructed Post-FIRM is at/above the BFE, then appropriate rates are applied. These rates are often lower, in general, than the Pre-FIRM rates because the risk is known and the rating can be based on actuarial flood data.

For a Pre-FIRM building, the property owner may acquire an Elevation Certificate. If the Elevation Certificate indicates that the lowest floor of the building is above the BFE, then it is possible that the insurance premium can be reduced, based on the Elevation Certificate.

If an Elevation Certificate has been prepared for a property, you may be able to obtain it from a previous or current property owner, the developer or the local community. Communities often require Elevation Certificates for properties as part of the permitting process. You can contact the local floodplain administrator or the planning and zoning office to see if an Elevation Certificate exists.

10. Where can I view specific information about flood insurance?

Flood insurance information and documentation for both lenders and insurers, including Frequently Asked Questions, are available in the National Flood Insurance Program section of the FEMA Website. Additional information for insurance agents and lenders also is available on the FloodSmart.gov Website.